Management Education and the Asian Century

Permissions: This work is protected by copyright and may be linked to without seeking permission. Permission must be received for subsequent distribution in print or electronically. Please contact mpub-help@umich.edu for more information.

Most major American business schools now appreciate Asia's
remarkable economic vitality and are aggressively pursuing educational
opportunities in the region. They are competing for the regions top students,
for partnerships with the best business schools, for close relationships
with the most prestigious Asian companies, and for the wealthiest donors.
Although several top American business schools have been working in Asia
for more than a decade, there is a growing sense of urgency as business
schools throughout the world, including those based in the UK, Australia,
New Zealand, and throughout Asia itself, devote greater resources to the
region. The trend parallels the change in attitude in American business,
which has learned that comprehensive, long-term strategies are needed
for Asia because of its enormous complexity, the vast number of business
opportunities available, and the intense competition within most industries.

For the majority of Americans and American businesses, Asia
is still more of an economic threat than an opportunity. The first widespread
evidence of Asia's economic power came during the oil crisis of 1973,
when rising gasoline prices created an explosion in demand for fuel-efficient
Japanese cars. The real shock came later, however, when the Japanese retained
their share of the American market during the 1970s and 1980s through
a combination of superior design and quality. While the initial reaction
was to attribute Japans success to lower labor costs and government subsidies,
there finally came the grudging acknowledgement that the Japanese were
simply more skilled at designing and building cars. Detroit has since
bounced back admirably, using many Japanese management techniques to lower
costs and improve quality. Nevertheless, most Americans continue to believe
that Asia's most important economic role is as a producer of cheap imports
that endanger American jobs.

While Japan is still responsible for roughly half of Asia's
gross national product, there are eleven other major economies in Asia,
most of which are growing rapidly. The focus of current business interest
is China, which has one of the highest growth rates in the world. India
is undergoing an unprecedented program of economic liberalization. Korea,
already Asia's fourth largest economy, continues to grow rapidly. The
ethnic Chinese regions of Hong Kong, Singapore, and Taiwan all wield economic
power far out of proportion to their combined population of only thirty
million. In Southeast Asia, Indonesia, Malaysia, and Thailand all have
booming economies, with the Philippines and Vietnam both showing a resurgence
after extended periods of economic malaise.

Despite immense variations in language, culture, history,
and climate, Asia's economies have taken remarkably similar development
paths. Most have had authoritarian governments whose pro-growth policies
were strongly supported by their populations; most adopted trade policies
that protected domestic businesses from foreign competition; all followed
economic policies that promoted export-led growth. A major factor in their
success was the United States, which promoted political stability in the
region and offered a vast, largely unprotected market for Asian manufacturers.

Last year, the Michigan Business School became the first
top-tier American business school to develop a written strategic plan
for Asia. Dean Joe White initiated the process with a series of small
meetings with Asia specialists within the school, which eventually grew
to include more than thirty faculty and staff from throughout the Universitys
Asian studies community. One of the first steps was to map our existing
resources for each of Asia's twelve major economies in such areas as faculty
expertise, curriculum content, and alumni networks. The final document
addresses four major areasfaculty development, curriculum, executive education,
and student and alumni relationsand includes a specific action plan for
each.

Faculty Development

The business schools expertise on Asia is already substantial
compared to other American business schools, but it resides in a small
minority of faculty. If one defines an area specialist as someone with
language fluency, an active program of field research, and an extensive
network of business and academic contacts in the region, then the business
school has three area specialists on Japan, three on India, one on Southeast
Asia, and one on China. One component of our Asia strategy is designed
to improve the research and teaching productivity of our Asia specialists
and to facilitate their interaction with other business school faculty
interested in Asia.

The strategy also creates more opportunities for business
school faculty who are not Asia specialists to learn about Asia through
travel, teaching overseas, and research collaboration with faculty at
Michigan and in Asia. A major part of this effort is a pair of partnerships
with Cathay Pacific Airways in Hong Kong and Daewoo in South Korea. Each
provides an in-house MBA program for company executives through a combination
of classroom study and distance learning. These projects will provide
faculty with many opportunities to teach in Korea and Hong Kong over the
next several years. Another opportunity for faculty to visit Asia is through
the William Davidson Institute, where faculty serve as advisors to student
research projects conducted at three different sites in China.

Another aspect of the strategy creates mechanisms for greater
involvement by the Universitys Asian studies community in the business
school. The business schools location in a major research university,
with strengths in both Asian studies and the social sciences, has already
placed us in the unique position of being strong in both the traditional
functional areas of international business and in the area-focused, comparative
approach to research and teaching. Currently, faculty from psychology,
sociology, political science, economics, and four foreign language departments
are involved in international teaching and research in the business school.

Collaboration with colleagues outside of the business school
has been greatly aided by three major grantsone to study how the Japanese
manage technology, one to promote the integration of area studies into
international business teaching and research, and the other to establish
the William Davidson Institute, which is devoted to teaching and research
on transitional economies. In each case, however, the funds were awarded
because the University could already show significant progress in and
commitment to interdisciplinary collaboration. Moreover, the existence
of a major research university is clearly not sufficient to guarantee
interdisciplinary collaboration in international business, as demonstrated
by the frustrations voiced by our colleagues on other campuses.

One of the most interesting areas of collaboration between
the business school and the area studies community has been on the question
of how Asian and American business organizations learn from one other.
With the help of a federal grant to study Japanese technology management,
Michigan faculty are studying how Japanese management methods are transferred
to American companies. The nature of these studies are highly interdisciplinary,
with teams of faculty from business, engineering, sociology, and political
science involved. Under the particularly close investigation are Japanese
automakers with factories based in the United States, which have transferred
to American managers and workers many of the skills that have made Japanese
factories among the most efficient and defect-free in the world. American
automakers have adopted these skills so successfully that they are now
transferring them to their factories in Europe. Another team of business
school and psychology department faculty are studying Chinese-American
joint ventures in collaboration with a research institute based in China.

Another fertile area for University-wide collaboration has
been in the field of political economy. A pair of faculty from political
science and the business school have conducted a detailed study of the
relationship between firm performance and ownership patterns in India,
contrasting firms with different levels of government, private, and foreign
control. The Center for International Business Education, a Title VI national
resource center based at the business school, has funded this project
and others focusing on Asia, with several grants going to doctoral students
in political science who are writing dissertations on Asian political
economy. Recently the Business School and the Department of Political
Science submitted a proposal to the International Institute to create
a new joint faculty position in Korean political economy, which would
be the first of its kind in the United States. The new faculty position
would be part of a major effort at the university level, coordinated by
the International Institute, to develop a comprehensive program in Korean
studies. Several business school faculty were also instrumental in securing
the recent $2 million grant from the Korea Foundation to create an endowed
professorship in Korean studies.

While collaboration with area studies faculty is critically
important for developing the business schools expertise in Asian business,
it is by no means sufficient. Faculty from disciplines outside the business
school provide critically important expertise and insights into political,
economic, social, and cultural environments, but they rarely have the
research and teaching interests that enable them to develop expertise
in operational business problems at the firm level. The ideal research
environment will include a strong cohort of area studies faculty with
an interest in Asian business, an independent group of Asia specialists
in the business school, and numerous opportunities for collaboration within
and between the two groups.

Curriculum

Business schools have long been under considerable pressure
from students, alumni, and accrediting agencies to internationalize their
curricula. At most schools, this has meant a broadening of traditional
disciplines such as accounting, finance, and marketing to include an international
dimension. This is an approach that gives students a broad overview of
international business that is close to ideal for their typical work environmentthe
multinational corporation based in the United States. While this method
often comes studded with many specific examples, case studies, and anecdotes
from all over the world, including Asia, it does not actually teach our
students how to manage within the confines of business systems other than
our own.

Most business schools and their constituencies have been
satisfied with this approach, and for good reason. When American managers
have been forced to confront different cultures and business systems directly,
it has often been in Europe, with its linguistic and cultural similarities
to North America. In non-European business environments, American managers
have usually been able to delegate the task of intercultural negotiation
to foreign nationals who are fluent in English, often through living and
studying in the United States. The economic emergence of Asia, however,
has brought all of this into question. To quote an American executive
with extensive experience in China: China isnt just a different country.
China is a different world. It is impossible, for example, to understand
the climate for foreign investment in China without first appreciating
the long and paradoxical relationship that China has had with the West.
Nor can the nature of business in Southeast Asia be appreciated unless
the there is some understanding of the history of ethnic Chinese populations
in the regions business centers. There are also serious shortages of managerial
talent in virtually all of the major business centers of Asia outside
of India, with the result that salaries for local managers are rising
rapidly and that job-hopping has become common in such cities as Hong
Kong and Singapore. Americans and other expatriates often have to be used
to provide some continuity, with the result that they are forced to negotiate
with the local culture without intermediaries.

The business schools reaction to this trend has been to
place more emphasis on Asia in its curriculum. Two electives focus specifically
on Asia business, with two more to follow in the next year. Other courses
in corporate strategy, technology management, finance, accounting, and
marketing all have a strong Asia focus. For students who are committed
to becoming Asia specialists, there is a joint degree program that enables
students to earn both an MBA and an MA degree in Asian studies over three
years. Another aspect of the business schools Asia strategy is to significantly
expand the size of this program through more publicity, additional fellowship
funds, and closer relationships with recruiting companies.

There are obvious limitations to how much a student can
learn about Asian business by sitting in a classroom in Ann Arbor. Students
can spend time working and studying in Asia through internships sponsored
by the Center for International Business Education and the Japan Technology
Management Program, through participation in field research projects sponsored
by the William Davidson Institute, and through study abroad at one of
several Asian universities. The business school and CIBE also sponsor
an annual two-week tour to Asia where students can visit local businesses,
business schools, and government agencies.

Executive Education

The chronic shortage of managerial talent in most Asian
business centers presents a unique opportunity for American business schools.
One response to the shortage has been an explosion in demand for management
training and development, both as a means to prepare managers for more
responsibility and as a retention strategy. As a result, hundreds of business
schools from all over the world are now offering courses and degree programs
in the region. There is particularly strong demand for courses that will
help companies develop coherent long-range strategies in marketing and
human resources: many companies have been growing so fast that they are
using business practices and structures that are inappropriate for their
size and complexity.

One of the unique strengths of the Michigan Business School
is its strong emphasis on continuing education. Our executive education
center is the largest in the world in terms of annual participants (over
5,000) and currently holds about 13% of the world market for university-based
executive education. Courses vary in length from a single day to four
weeks and are often taught by teams of business school faculty. A major
part of our Asia strategy is to use this strength to become the premier
provider of executive education in the region.

There is strong demand in Asia for executive courses that
deliver content that is very similar to what is taught to American executives
in Ann Arbor. English is widely spoken in Hong Kong, Singapore, Kuala
Lumpur, and Bangkok, and throughout India. American business schools have
a reputation in Asia for exceptional teaching quality, and many firms
would prefer an untailored product that is well-taught and well-organized
to a local product that may have more relevance to the local environment.
In addition, many Asian executives prefer to determine the relevance of
these courses themselves rather than entrust the tailoring process to
American academics. Nevertheless, there is also rapidly growing demand
for executive courses that have been carefully tailored to the needs of
the local market. In this sector, only business schools that have substantial
expertise in Asian business will be successful, since these courses must
reflect national and regional business environments, use local examples
and case studies, and use instructors who have credibility with local
managers. The business school is one of the few institutions in the United
States in a position to address the needs of this market.

Students and Alumni

Many American business schools recruit aggressively in Asia,
particularly for their MBA programs. A major part of our Asia strategy
is to increase the quality and quantity of degree program applicants from
all Asian countries. A strong cohort of students from Asia has many advantages,
including the eventual strengthening of our alumni network in the region
and the integration of regional experience and cultural insights into
classroom teaching. Admissions staff will spend more time in Asia and
are currently developing publicity materials designed for Asian applicants.

Most of the American business schools that are currently
well-known in Asia can attribute their visibility and success to strong
alumni support. Loyal and dedicated alumni recruit students, provide important
contacts in industry and government, contribute funds for new programs,
and enhance the visibility of the school. Like many other parts of the
university, we lag behind our private peer institutions in alumni relations.
In the past year, however, Business School Dean Joe White has visited
alumni clubs in Bangkok and Singapore, and later this year will visit
alumni groups in Seoul, Tokyo and Hong Kong.

Just as American business now seems to have firmly grasped
the significance of Asia's economic power, American business schools realize
that Asia must be a significant part of their long-term strategies for
faculty development, curriculum enrichment, continuing education, student
recruiting, and alumni relations. Those who remain doubtful should revisit
the experience of U.S. automakers in the 1970s, who ignored the Asian
challenge until it was nearly too late.

Bradley Farnsworth is the Director of the Center
for International Business Education at the School of Business Administration.